RHB downgrades StarHub to ‘sell’, Citi to ‘neutral’ as profit slides; DBS reviews rating

[SINGAPORE] Analysts on Friday (Feb 13) downgraded StarHub shares, after the telco posted a 50.9 per cent year-on-year drop in second-half net profit.

StarHub’s second-half revenue was also down 3.1 per cent on the year, from S$1.3 billion to S$1.2 billion. This prompted RHB analysts to downgrade the stock to “sell”, setting a S$1 target price, while Citi analysts downgraded it to “neutral” with a S$1.14 target price.

Shares of the telco slid 5 per cent, or S$0.06, to close at S$1.14 on Thursday following the results.

“We had originally envisioned robust earnings and dividend growth into financial years 2026 to 2028,” said Citi analysts Arthur Pineda and Luis Hilado, citing the telco’s S$70 million cost-cutting programme and prospects of “mobile market repair”.

However, those hopes dimmed after StarHub management lowered its earnings before interest, tax, depreciation and amortisation (Ebitda) guidance range by 20 to 25 per cent to focus on “commercial flexibility”.

“An earnings recovery looks to be pushed back given the competitive intensity and decision to retain commercial flexibility,” said RHB.

The telco also plans to ramp up capital expenditure to between 13 and 15 per cent of total revenue, up from 6.7 per cent in FY2025.

Citi analysts described the spending hike as “unexpected” and slashed their profit forecasts for the next two years by 54 to 64 per cent. RHB cut its estimates by a similar 58 to 63 per cent.

While the analysts believe the stock’s minimum-dividend payout of S$0.06 per share offers a “safety net” that prevents them from rating it a “sell”, they warned that the yield alone is not enough to drive the share price higher.

“We think the absence of earnings growth visibility in the near term would serve to anchor share price prospects,” they wrote. “The street will likely need to see proof of actual execution on earnings per share growth revival before revisiting the stock.”

RHB analysts also forecast “tight mobile competition” continuing with the upcoming M1-Simba merger and a battle over prices to possibly stabilise in late 2026 or 2027.

DBS reviewing target price, call

Separately, DBS Group Research said it has placed its recommendation and target price for StarHub “under review”.

DBS analyst Sachin Mittal noted that the telco’s fourth-quarter normalised earnings of S$12.3 million, a 67.6 per cent plunge year on year, fell “significantly below” the consensus estimate of S$28.5 million.

He highlighted a stark disconnect between market expectations and the company’s reality. While analysts had expected Ebitda to grow by 9 per cent in FY2026, StarHub is now guiding for earnings to fall to between 75 and 80 per cent of 2025 levels.

Mittal added that StarHub expects a recovery in the mobile segment only towards the end of 2026, later than the market’s expectation of a mid-year rebound.

This comes as management pivots to prioritise “profitable consumer growth” over aggressive subscriber acquisition.